Japan destruction hits insurance companies hard

The Devastating Earthquke in Japan has Hit Insurance Companies Worldwide

The Devastating Earthquke in Japan has Hit Insurance Companies Worldwide

Following Friday’s devastating earthquake and Tsunami, insurance company shares around the globe have tanked on fears of massive claims.

Preliminary figures estimate that insurance claims could cost the industry claims worth $35 billion (£22 billion).

In London and Paris, Aviva and AXA share prices fell by 3.1% and 3.4% respectively. In Frankfurt Munich Re and Allianz lost 3.4% and 2.9% respectively. In US, AIG and Travelers also suffered.

The current catastrophes in New Zealand and Japan may force insurers to charge higher, analysts feel.

There is no unanimity among experts about the level of claims to arise following the devastating earthquake and Tsunami.

James Shuck from Jeffries International pegged the claims figure between $10 and $20 billion while risk modeling agency puts the tab between $15 and $35 billion.

“Given the nature of the destruction, combined with the ongoing recovery efforts and evacuation areas, it will take some time to estimate the damage”, said reinsurance company Swiss Re in a statement.

Any further damage suffered due to explosions in the country’s nuclear facility is unlikely to hit the insurance industry, Swiss Re said.

“Generally, coverage for nuclear facilities in Japan excludes earthquake shock, fire following earthquake and tsunami, both in terms of physical damage and liability”, it added.

“Coverage for property policies excludes nuclear contamination”, the company said while clarifying about claims arising out of radioactive pollution. Hence nuclear contamination will “not significantly affect the private insurance industry”, it added.

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